Santander reveals new overdraft fees

DAILY charges for going overdrawn are set to become the norm after Santander became the latest high street giant to announce new current account fees.

The group will launch a current account in December with lower charges for customers going overdrawn without permission but with new daily fees for those with authorised overdrafts. Those going into the red with agreement will pay 50p a day up to a maximum of 5 a month.

Currently they face interest of up to 19.9 per cent, depending on the type of current account they have. Unauthorised overdrafts will cost 5 a day up to a maximum of 50 a month. There will also be a 5 charge for every item paid and 10 for every unpaid item while the account is overdrawn without permission.

Santander's move came on the heels of a similar announcement from Lloyds TSB last week. Lloyds TBB's current 15 a month charge for unauthorised overdrafts will be replaced in December by a 5 charge on both authorised and unauthorised overdrafts. The bank is also halving charges for items that cannot be paid when there isn't enough money in the account or an overdraft arranged to cover it. A 10 buffer zone will also be introduced for both planned and unplanned overdrafts.

Bank of Scotland attracted widespread criticism last December when it introduced a 1-a-day fee for authorised overdrafts up to 2,500 and 2-a-day above that.

David Black, head of banking at financial researchers Defaqto, said: "The changes result in some winners, typically those with larger overdrafts who are overdrawn for most of the month, and some losers, ie those with small overdrafts. The fixed charge per day is easier to understand but won't necessarily be cheaper than an interest charge."

But he predicted that other providers would move to a fixed daily charge structure. "Some banks have already moved to this structure and while there are undoubtedly pros and cons it does make it easier for consumers to know how much they will be charged - i.e. greater clarity," said Black.